As filed with the Securities and Exchange Commission on March 21, 2000
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
SOFTNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-1817252
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
650 Townsend Street, Suite 225, San Francisco, California 94103
(Address of principal executive offices) (Zip Code)
SOFTNET SYSTEMS, INC.
THE SOFTNET SYSTEMS, INC. 2000 EMPOLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
Dr. Lawrence B. Brilliant
Chairman of the Board and Chief Executive Officer
SOFTNET SYSTEMS, INC.
650 Townsend Street, Suite 225, San Francisco, California 94103
(Name and address of agent for service)
(415) 365-2500
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================== ==================== ==================== ========================= ================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered(1) Registered(2) per Share(3) Price Fee(2)
<S> <C> <C> <C> <C>
Common Stock , $01 Par Value 2,325,000 shares $29.34 $68,215,500 $18,009
=============================================================================================================================
Aggregate Registration Fee: $18,009
=============================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(2) This registration statement shall also cover any additional shares of
Common Stock which become issuable under The SoftNet Systems, Inc. 2000
Employee Stock Purchase Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in the
number of outstanding shares of the Registrant's Common Stock.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933, as amended, and
is based on the average of the high and low sale prices of the Common
Stock, as reported on The Nasdaq National Market on March 16, 2000.
Proposed sale to take place as soon after the effective date
of the registration statement as options granted
under the Plan are exercised.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information called for in Part I of Form S-8 is not being filed
with or included in this Form S-8 (by incorporation by reference or otherwise)
in accordance with the rules and regulations of the SEC.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which were filed with the SEC, are
incorporated herein by reference:
(a) Our Annual Report on Form 10-K for the fiscal year
ended September 30, 1999, filed with the SEC on
December 29, 1999;
(b) Our Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 1999, filed with the SEC
on February 14, 2000;
(c) Our Current Reports on Form 8-K filed with the SEC on
October 15, 1999, October 21, 1999, December 30, 1999
and March 17, 2000; and
(d) The description of the common stock, par value $.01
per share, contained in our registration statement on
Form 8-A, filed with the SEC on April 14, 1999, as
amended by our registration statement on Form 8-A/A,
filed with the SEC on April 22, 1999, including any
subsequently filed amendments and reports updating
such description.
In addition, all documents which we file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this registration statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part of this registration statement
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained in this registration statement, or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference in this registration statement, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
registration statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Our certificate of incorporation limits the liability of our directors
to the maximum extent permitted by Delaware law. Delaware law provides that a
director of a corporation will not be personally liable for monetary damages for
breach of such individual's fiduciary duties as a director except for liability
for:
<PAGE>
o any breach of such director's duty of loyalty to the corporation;
o any acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o any unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or
o any transaction from which a director derives an improper personal
benefit.
Our bylaws provide that we will indemnify our directors and may
indemnify our officers, employees and other agents to the full extent permitted
by law. We believe that indemnification under our bylaws covers at least
negligence and gross negligence on the part of an indemnified party and permits
us to advance expenses incurred by an indemnified party in connection with the
defense of any action or proceeding arising out of such party's status or
service as one of our directors, officers, employees or agents upon an
undertaking by such party to repay such advances if it is ultimately determined
that such party is not entitled to indemnification.
We have entered into separate indemnification agreements with each of
our directors and officers. These agreements require us, among other things, to
indemnify such director or officer against expenses, including attorney fees,
judgments, fines and settlements (collectively, "Liabilities") paid by such
individual in connection with any action, suit or proceeding arising out of such
individual's status or service as one of our directors or officers, other than
Liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest, and to advance expenses incurred by such
individual in connection with any proceeding against such individual with
respect to which such individual may be entitled to indemnification by us. We
believe that our certificate of incorporation and bylaw provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
See Index to Exhibits on page 6.
Item 9. Undertakings.
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10
(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
<PAGE>
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this registration statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the SEC by us
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by one of our directors,
officers or controlling persons in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements for filing on Form S-8 and have duly caused this registration
statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on this 20 th day
of March, 2000.
SOFTNET SYSTEMS, INC.
By: /s/ Dr. Lawrence B. Brilliant
-------------------------------------------------
Dr. Lawrence B. Brilliant
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of SoftNet Systems, Inc., a
Delaware corporation, do hereby constitute and appoint Dr. Lawrence B. Brilliant
and Douglas S. Sinclair, and each of them, the lawful attorneys and agents, with
full power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this registration statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this registration statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
registration statement, and to any and all instruments or documents filed as
part of or in conjunction with this registration statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof. This power of attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Lawrence B. Brilliant
- --------------------------
Dr. Lawrence B. Brilliant Chairman of the Board March 20, 2000
and Chief Executive Officer
/s/ Ronald I. Simon
- --------------------------
Ronald I. Simon Vice Chairman of March 20, 2000
the Board of
/s/ Ian B. Aaron
- --------------------------
Ian B. Aaron Director and President March 20, 2000
/s/ Douglas S. Sinclair
- --------------------------
Douglas S. Sinclair Chief Financial Officer March 20, 2000
/s/ Edward A. Bennett
- --------------------------
Edward A. Bennett Director March 20, 2000
/s/ George C. Chan
- --------------------------
George C. Chan Director March 20, 2000
/s/ Rocco B. Commisso
- --------------------------
Rocco B. Commisso Director March 20, 2000
/s/ Robert C. Harris, Jr.
- --------------------------
Robert C. Harris, Jr. Director March 20, 2000
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
5.1 Opinion of Jason G. Wilson, our Assistant General Counsel.
23.1 Consent of Jason G. Wilson, our Assistant General
Counsel (included in Exhibit 5.1).
23.2 Consent of KPMG LLP, Independent Auditors.
23.3 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
24.1 Power of Attorney (included in the signature page to
this registration statement).
99.1 The SoftNet Systems, Inc. 2000 Employee Stock Purchase Plan
SOFTNET SYSTEMS, INC.
650 Townsend Street
San Francisco, California 94103
March 21, 2000
SoftNet Systems, Inc.
650 Townsend Street, Suite 225
San Francisco, California 94103
Re: Registration Statement No. 333- ; 2,325,000 shares of Common
Stock, par value $.01 per share
Ladies and Gentlemen:
The undersigned is Assistant General Counsel to SoftNet Systems, Inc.,
a Delaware corporation (the "Company"), and has acted as counsel to the Company
in connection with the registration of 2,325,000 shares of the Company's common
stock, par value $0.01 per share (the "Shares"), available for issuance under
the Company's 2000 Employee Stock Purchase Plan (the "Plan"), under the
Securities Act of 1933, as amended, by the Company on Form S-8 filed with the
Securities and Exchange Commission on March 21, 2000 (the "Registration
Statement").
In my capacity as counsel in connection with such registration, I am
familiar with the proceedings taken and proposed to be taken by the Company in
connection with the authorization, issuance and sale of the Shares. In addition,
I have made such legal and factual examinations and inquiries, including an
examination of originals or copies certified or otherwise identified to my
satisfaction of such documents, corporate records and instruments, as I have
deemed necessary or appropriate for purposes of this opinion.
In my examination, I have assumed the genuineness of all signatures,
the authenticity of all documents submitted to me as originals, and the
conformity to authentic original documents of all documents submitted to me as
copies.
I am opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware, including statutory and
reported decisional law thereunder, and I express no opinion with respect to the
applicability thereto, or the effect thereon, of any other laws.
Subject to the foregoing and in reliance thereon, it is my opinion that
the Shares have been duly authorized and, upon the issuance and sale of the
Shares, each in the manner contemplated by the Registration Statement and in
accordance with the terms of the Plan, the Shares will be legally and validly
issued, fully paid and nonassessable.
I consent to your filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Jason G. Wilson
Jason G. Wilson
Assistant General Counsel
Exhibit 23.2
CONSENT OF KPMG LLP, INDEPENDENT AUDITORS
We consent to incorporation herein by reference of our report dated November 30,
1999, relating to the consolidated balance sheet of SoftNet Systems, Inc. and
Subsidiaries as of September 30, 1999 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the year then
ended, and the related schedule, which reports appear in the September 30, 1999,
annual report on Form 10-K of SoftNet Systems, Inc.
KPMG LLP
Mountain View, California
March 21, 2000
<PAGE>
Exhibit 23.3
CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated December 1, 1998, except for Note 9
regarding the Senior Subordinated Convertible Notes for which the date is
January 13, 1999 and Note 5 regarding the discontinuance of the document
management segment for which the date is April 13, 1999, relating to the
financial statements and financial statement schedule as of September 30, 1997
and 1998 and for the two years in the period ended September 30, 1998, which
report appears in the September 30, 1999 annual report on Form 10-K of SoftNet
Systems, Inc.
PricewaterhouseCoopers LLP
San Jose, California
March 21, 2000
SOFTNET SYSTEMS, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SoftNet Systems, Inc. a Delaware corporation (the "Company"), hereby adopts
the SoftNet Systems, Inc. 2000 Employee Stock Purchase Plan (the "Plan"),
effective as of the Effective Date (as defined herein).
1. Purpose. The purpose of the Plan is to assist employees of the Company
and its Designated Subsidiary Corporations (as defined below) in acquiring stock
ownership interests in the Company, pursuant to a plan which is intended to
qualify as an "employee stock purchase plan" within the meaning of Code Section
423. The Plan is intended to help employees provide for their future security
and to encourage them to remain in the employ of the Company and its Subsidiary
Corporations.
2. Definitions. Whenever one of the following terms is used in the Plan
with the first letter or letters capitalized, it shall have the following
meaning, unless the context clearly indicates to the contrary (such definitions
to be equally applicable to the singular and plural forms of the terms defined):
(a) "Administrator" shall mean the Company, acting through its Chief
Executive Officer or his or her delegate.
(b) "Authorization Card" shall mean the form prescribed by the
Administrator, which shall include a form of stock purchase agreement
pursuant to which an Eligible Employee shall purchase shares of Stock
under the Plan and a form of payroll deduction authorization pursuant
to which such Eligible Employee shall authorize the Company or a
Designated Subsidiary Corporation to deduct such Eligible Employee's
contributions under the Plan.
(c) "Base Pay" shall mean total gross pay received by an Employee on each
Payday as cash compensation for services to the Company or any
Designated Subsidiary Corporation.
(d) "Board of Directors" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Company" shall mean SoftNet Systems, Inc., a Delaware corporation.
(g) "Designated Subsidiary Corporation" means any Subsidiary Corporation
designated by the Board in accordance with Section 2(u).
(h) "Effective Date" shall mean the first day of the first Offer Period,
which shall be April 1, 2000.
(i) "Eligible Employee" shall mean any Employee who satisfies the
requirements of Section 4.
(j) "Employee" shall mean any person who renders services to the Company
or any Designated Subsidiary Corporation in the status of an employee
within the meaning of Code Section 3121(d). "Employee" shall not
include any director of the Company or any Subsidiary Corporation who
does not render services to the Company or any Subsidiary Corporation
in the status of an employee within the meaning of Code Section
3121(d).
(k) "Enrollment Period" shall mean, for each Offer Period, the two or
three week period (as applicable) determined in accordance with
Section 6(b) or such other period as determined by the Administrator
in its discretion.
<PAGE>
(l) "Entry Date" shall mean the date an Eligible Employee is granted an
Option during the Offer Period. The first Entry Date under the Plan
shall be the Effective Date. Subsequent Entry Dates under the Plan
shall be each July 1 and January 1 during the period that the Plan is
in effect.
(m) "Offer Period" shall mean the period beginning on each Entry Date and
ending on the date which is the six-month anniversary of such date;
provided, however, that the first Offer Period shall commence on the
Effective Date and end on June 30, 2000.
(n) "Option" shall mean a right granted to an Eligible Employee to
purchase shares of Stock under Section 8(a) of the Plan.
(o) "Option Price" shall mean the per share exercise price of shares of
Stock to be purchased pursuant to an Option, as provided in Section 9.
(p) "Parent Corporation" shall mean any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company
if, at the time of the granting of the Option, each of the
corporations other than the Company own stock possessing 50% or more
of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(q) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan and complies with the provisions of Section 6.
(r) "Payday" of an Employee shall mean the regular and recurring
established day for payment of cash compensation to Employees in the
same classification or position.
(s) "Plan" shall mean this SoftNet Systems, Inc. 2000 Employee Stock
Purchase Plan.
(t) "Purchase Date" shall mean the last day of each Offer Period on which
shares of Stock are automatically purchased for Participants under the
Plan.
(u) "Subsidiary Corporation" shall mean any corporation, other than the
Company, in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain. Any corporation that is a Subsidiary Corporation as of the
Effective Time shall be a Designated Subsidiary Corporation for
purposes of this Plan, and such corporation's Employees shall be
eligible to be granted Options under the Plan; provided, however, that
after the Effective Time, the Board may designate from among any
Subsidiary Corporations, as determined from time to time, the
Subsidiary Corporation or Subsidiary Corporations whose Employees
shall be eligible to be granted Options under the Plan. The Board may
designate a Subsidiary Corporation, or terminate the designation of a
Subsidiary Corporation, without the approval of the stockholders of
the Company.
(v) "Stock" shall mean the shares of the Company's Common Stock, $.01 par
value.
3. Stock Subject to the Plan.
(a) The maximum aggregate number of shares of Stock subject to any Option
shall not exceed 200,000 shares.
(b) The Company shall reserve for issuance under the Plan 1,325,000 shares
of the Company's authorized but unissued Stock; provided, however,
that during the term of the Plan, such number of shares shall be
increased by 100,000 shares on each January 1, commencing with January
1, 2001.
(c) If any Option expires or is canceled without having been
fullyexercised, the number of shares subject to such Option but as to
which such Option was not exercised before its expiration or
cancellation may again be optioned hereunder, subject to the
limitations of subsection (a).
<PAGE>
(d) Any adjustment to the number of shares of Stock reserved for issuance
under the Plan shall be made only in accordance with Sections 14
(relating to recapitalization) and 17 (relating to amendments of the
Plan).
4. Eligibility. Each Employee of the Company or any Designated Subsidiary
Corporation who on the first day of any Enrollment Period is customarily
employed by the Company or any Designated Subsidiary Corporation for more than
twenty (20) hours per week, shall become an Eligible Employee on such day.
5. Purchase Rights.
(a) Options shall be granted under the Plan until the earlier
of the maximum number of shares of Stock subject to sale pursuant to Options
have been sold, or the Plan is terminated.
(b) The Plan shall be implemented under successive Offer
Periods. Subject to subsection (c), the first Offer Period will begin on the
Effective Date and will end on June 30, 2000.
(c) Under no circumstances shall any shares of Stock be issued
hereunder until such time as (i) the Plan shall have been approved by the
Company's stockholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which shares of
the Stock are listed and all other applicable statutory and regulatory
requirements.
(d) Each Eligible Employee shall be granted a separate Option
for each Offer Period. The Option shall be granted on the Entry Date for the
relevant Offer Period and shall be automatically exercised on the last day of
such Offer Period.
6. Participation in the Plan.
(a) Each Eligible Employee may elect to participate in the
Plan by submitting to the Administrator a completed and executed Authorization
Card in accordance with subsection (b). An Eligible Employee who elects to
participate in the Plan shall elect on such Authorization Card any whole
percentage of Base Pay (such percentage not to exceed fifteen percent (15%)) to
be withheld by payroll deduction, which upon an exercise of the Option granted
to such Eligible Employee with respect to the Offer Period, shall be contributed
to the Company as payment for shares of Stock purchased pursuant to such Option.
The deduction rate authorized by any Eligible Employee shall continue in effect
for the remainder of the Offer Period and for successive Offer Periods, except
to the extent such rate is changed in accordance with the following:
(i) Each Eligible Employee may, at any .one time
during the period commencing two weeks prior to a Purchase Date, increase (not
to exceed fifteen percent (15%)) or reduce his or her percentage of payroll
deduction to any whole percentage by filing a new completed and executed
Authorization Card with the Administrator (or his or her designate); provided,
however, that any such increase or reduction shall only be effective beginning
on the first day of the subsequent Offer Period.
(ii) Notwithstanding subsection (i), any Eligible
Employee may cease payroll deductions and/or withdraw from participation under
the Plan at any time by reducing his or her percentage of payroll deduction to
zero percent (0%), except that no Eligible Employee may cease payroll deductions
and/or withdraw during the period commencing two weeks prior to a Purchase Date.
An Eligible Employee electing to cease payroll deductions and/or withdraw from
the Plan must deliver to the Administrator a notice of withdrawal approved by
the Administrator (the "Cessation/Withdrawal Election") not later than the date
which is two weeks prior to a Purchase Date. Upon receipt of an Eligible
Employee's Cessation/Withdrawal Election pursuant to which the Eligible Employee
provides notice of his or her intent to withdraw from the Plan, the Company or
Designated Subsidiary Corporation will as soon as practicable thereafter pay to
such Eligible Employee in cash in one lump sum the balance of payroll deductions
credited to such Eligible Employee's account under the Plan, without the payment
of any interest thereon, and the Eligible Employee will at that time be deemed
to have ceased to participate in the Plan and may only recommence active
participation in the Plan by submitting to the Administrator a new completed and
executed Authorization Card in accordance with subsection (b). Upon receipt of
an Eligible Employee's Cessation/Withdrawal Election pursuant to which the
Eligible Employee indicates his or her intention to cease participation but does
not provide notice of his or her intent to withdraw from the Plan, such Eligible
Employee's payroll deductions shall cease as soon as administratively
practicable following the Administrator's receipt of his or her
Cessation/Withdrawal Election, and his or her Option shall be exercised on the
Purchase Date in accordance with Section 8(b).
<PAGE>
(b) Except as permitted otherwise by the Administrator in its
discretion, an Employee who is an Eligible Employee on the Effective Date must
submit his or her Authorization Card to the Administrator during the three week
period immediately prior to the Effective Date in order to participate in the
first Offer Period under the Plan. Except as permitted otherwise by the
Administrator in its discretion, an Employee who is an Eligible Employee on the
Effective Date but who does not submit his or her Authorization Card to the
Administrator during such three week period or an Employee who becomes an
Eligible Employee subsequent to the Effective Date must submit his or her
Authorization Card to the Administrator during the two week period commencing
one month prior to such Eligible Employee's Entry Date, or during such other
period designated by the Administrator in its sole discretion.
(c) An Eligible Employee's Authorization Card shall include
express written authorization by the Eligible Employee to the Company to issue
shares of Stock purchased under the Plan to an account in the name of such
Eligible Employee with a brokerage firm to be designated by the Administrator.
7. Payroll Deductions.
(a) Cash compensation payable to an Eligible Employee who
elects to participate in the Plan for an Offer Period shall be reduced each
Payday during such Offer Period through payroll deductions by an amount equal to
the whole percentage of Base Pay payable on such Payday elected by the Eligible
Employee under Section 6.
(b) The amount of each Eligible Employee's payroll deduction
shall be held by the Company or Designated Subsidiary Corporation and credited
to an account established for such Eligible Employee. Neither the Company nor
any Subsidiary Corporation shall pay any interest on the funds credited to an
Eligible Employee's account under the Plan.
(c) During a leave of absence from the Company or any
Designated Subsidiary Corporation which is approved by the Company or Designated
Corporation and which meets the requirements of Treasury Regulation Section
1.421-7(h)(2), an Eligible Employee may continue to participate in the Plan by
making cash payments to the Company or Designated Subsidiary Corporation on each
Payday equal to the dollar amount of the payroll deduction made for such
Eligible Employee for the Payday next preceding the first day of such Eligible
Employee's leave of absence.
8. Grant of Options; Exercise of Options.
(a) Each Eligible Employee shall be granted an Option on his
or her Entry Date for the Offer Period. Each Eligible Employee's Option shall be
automatically exercised on the Purchase Date for the Offer Period to which such
Option relates. The number of shares of Stock subject to an Option shall be the
quotient of the total payroll deductions made for the Eligible Employee during
the Offer Period divided by the Option Price with respect to such Offer Period,
excluding fractional shares of Stock; provided, however, that the number of
shares of Stock subject to each Option shall not exceed 200,000 shares.
(b) Except as otherwise provided in subsection (e) and
Sections 6(a)(i) and (ii), each Eligible Employee participating in the Plan
shall be deemed to have exercised his or her Option on the Purchase Date for
each Offer Period in which the Eligible Employee is participating in the Plan,
to the extent that the balance of payroll deductions credited to such Eligible
Employee's account under the Plan is sufficient to purchase, at the Option
Price, whole shares of Stock. No fractional shares of Stock shall be purchased
upon the exercise of an Option and any funds credited to such Eligible
Employee's account remaining after the purchase of whole shares of Stock upon
exercise of an Option shall remain credited to such Eligible Employee's account
and carried forward for purchase of shares of Stock pursuant to the exercise of
the Option on the Purchase Date relating to the next following Offer Period.
<PAGE>
(c) Upon exercise of an Option, the Company shall as soon as
practicable thereafter issue to the Eligible Employee such shares of Stock
purchased pursuant to subsection (b). Such Stock is initially to be held in the
brokerage account established by the Eligible Employee at such brokerage firm as
designated by the Administrator and as authorized by the Eligible Employee upon
enrollment in the Plan.
(d) If the total number of shares of Stock for which Options
are to be exercised on any date exceeds the number of shares remaining unsold
under the Plan (after deduction of all shares for which Options have theretofore
been exercised), the Administrator shall make a pro rata allocation of the
available remaining shares in as nearly a uniform manner as shall be practicable
and any balance of payroll deductions credited to the accounts of Eligible
Employees which have not been applied to the purchase of shares of Stock shall
be paid to such Eligible Employees by the Company or Designated Subsidiary
Corporation in cash in one lump sum as soon as practicable, without payment of
any interest thereon.
(e)Notwithstanding any provision in the Plan to the contrary,
an Eligible Employee shall not be granted an Option:
(i) if, immediately after the Option is granted,
such Employee would own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company, any Parent Corporation or
any Subsidiary Corporations. For purposes of determining stock ownership under
this paragraph, the rules of Code Section 424(d) shall apply and Stock which an
Eligible Employee may purchase under outstanding options held by such Eligible
Employee shall be treated as stock owned by such Eligible Employee; or
(ii) which permits such Eligible Employee's rights
to purchase stock under the Plan and all other employee stock purchase plans of
the Company, any Parent Corporation, or any Subsidiary Corporations subject to
Code Section 423, to accrue at a rate which exceeds $25,000 of the fair market
value of such Stock or other stock (determined at the time such Option is
granted) for each calendar year in which such option is outstanding at any time.
For purpose of the limitations imposed by this subsection, the right to purchase
Stock or other stock under an Option or other option accrues when the Option or
other option (or any portion thereof) first becomes exercisable during the
calendar year, the right to purchase Stock or other stock under an Option or
other option accrues at the rate provided in the Option or other option (but in
no case may such rate exceed $25,000 of fair market value of such Stock or other
stock determined at the time such Option or other option is granted) for any one
calendar year, and a right to purchase Stock or other stock which has accrued
under the Option or other option may not be carried over to any other Option or
other option.
(f) Any Employee who is an officer subject to Section 16(b)
under the Securities Exchange Act of 1934, as amended, shall not sell, transfer,
or otherwise dispose of any shares of Stock received upon the exercise of the
Option granted hereunder for a period of six months after the purchase of such
shares.
9. Option Price.
(a) The per share exercise price of each Option (the "Option
Price") shall be an amount equal to the lesser of:
(i) 85% of the "Fair Market Value" (as defined below) of a
share of Stock on the Participant's Entry Date into the
Plan for the relevant Offer Period; or
(ii) 85% of the Fair Market Value of a share of Stock on the
Purchase Date corresponding to the Offer Period for
which a Participant exercises his or her Option.
(b) For purposes of subsection (a), the Fair Market Value of a
share of Stock as of a given date shall be: (A) the closing price of a share of
Stock on the principal exchange on which the Stock is then trading, if any, on
such date, or, if shares of Stock were not traded on such date, then on the next
preceding trading day during which a sale occurred; (B) if the Stock is not
traded on an exchange, but is quoted on Nasdaq or a successor quotation system,
(X) the last sales price (if the Stock is then listed as a National Market Issue
under the NASD National Market System) or (Y) the mean between the closing
representative bid and asked prices (in all other cases) for a share of Stock on
such date, or, if shares of Stock were not traded on such date, then on the next
preceding trading day during which a sale occurred, as reported by Nasdaq or
such successor quotation system; (iii) if the Stock is not publicly traded on an
exchange and not quoted on Nasdaq or a successor quotation system, the mean
between the closing bid and asked prices for a share of Stock on such date, or,
if shares of Stock were not traded on such date, then on the next preceding
trading day during which a sale occurred, as determined in good faith by the
Board of Directors; or (iv) if the Stock is not publicly traded, the fair market
value of a share of Stock established by the Board of Directors acting in good
faith.
<PAGE>
10. Issuance of Certificates. In the event the Administrator is
required to obtain authority to issue certificates for any shares of Stock
purchased by an Eligible Employee under the Plan from any commissioner or
agency, the Administrator shall seek to obtain such authority. If the
Administrator is unable, after reasonable efforts, to obtain such authority, the
Administrator, the Company, and any Subsidiary Corporations shall be relieved
from all liability and shall pay to each such Eligible Employee the balance of
payroll deductions credited to each such Eligible Employee's account under the
Plan in cash in one lump sum as soon as practicable, without the payment of any
interest thereon.
11. Cessation of Participation.
(a) An Eligible Employee shall cease to participate in the
Plan in the event that:
(i) the Eligible Employee reduces his or her percentage of
payroll deduction to zero percent (0%); or
(ii) the Eligible Employee terminates employment with the
Company or any Designated Subsidiary Corporation for
any reason.
(b) Upon cessation of participation by an Eligible Employee,
such Eligible Employee's payroll deductions shall cease. If such cessation of
participation occurs during the last two weeks of an Offer Period or if such
cessation of participation is not accompanied by the Eligible Employee's notice
of withdrawal from participation in the Plan, such Eligible Employee's Option
shall be exercised on the next Purchase Date in accordance with Section 8(b).
Upon cessation of participation at any other time which is accompanied by the
Eligible Employee's notice of withdrawal from participation in the Plan or which
is the result of the Eligible Employee's termination of employment within the
Company or any Designated Subsidiary Corporation, any balance of payroll
deductions credited to such Eligible Employee's account under the Plan shall be
paid to the Employee (or his or her estate, in the event of the Eligible
Employee's death) in cash in one lump sum as soon as practicable after cessation
of participation, without payment of any interest thereon.
12. Transfer of Option. Options granted pursuant to the Plan shall not
be transferable by an Eligible Employee, other than by will or the laws of
descent and distribution, and shall be exercisable during the Eligible
Employee's lifetime only by such Eligible Employee.
13. Beneficiary. Each Eligible Employee shall designate on his or her
Authorization Card a beneficiary or beneficiaries and may, without such
beneficiaries' consent, change such designation. Any designation shall be
effective only after it is received by the Administrator and shall be
controlling over any disposition by will or otherwise. Upon the death of an
Eligible Employee, except as provided in Section 11(b), the balance of payroll
deductions credited to such Eligible Employee's account shall be paid or
distributed to the designated beneficiary or beneficiaries, or in the absence of
such designation, to the executor or administrator of the Eligible Employee's
estate, and in either event the Administrator, the Company, and any Subsidiary
Corporations shall not be under any further liability to anyone.
14. Recapitalization. If there shall be any change in the Stock subject
to the Plan or the Stock subject to any Option, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend
(in excess of 2% of the fair market value of the Stock) or other change in the
corporate structure of the Company, appropriate adjustments shall be made by the
Board of Directors to the aggregate number of shares subject to the Plan and the
number of shares and the price per share subject to outstanding Options in order
to preserve, but not to increase, the benefits of the Eligible Employees
hereunder; provided, however, that subject to any required action by the
<PAGE>
stockholders, if the Company shall not be the surviving corporation in any such
merger, consolidation or reorganization, every Option outstanding shall
terminate, unless the surviving corporation shall (subject to applicable
provisions of the Code) issue a new Option therefor or assume (with appropriate
changes) the existing Option in a manner complying with Code Section 424(a). If
the Option shall terminate by reason of such merger, consolidation, or
reorganization, then any provision herein to the contrary notwithstanding, any
Option held by an Eligible Employee may be exercised, in whole or in part, by
such Eligible Employee at any time designated by the Board of Directors which is
prior to or concurrent with the consummation of such merger, consolidation, or
reorganization.
15. Rights as a Stockholder. An Eligible Employee shall have no rights
as a stockholder with respect to any shares of Stock covered by Options until
the date of the issuance of a certificate for such shares of Stock. No
adjustments shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
otherwise expressly provided herein.
16. Costs; Indemnifications.
(a) The Company shall pay all costs and expenses incurred in
administering the Plan.
(b) In addition to such other rights of indemnification as the
Administrator may have as a director or officer of the Company, the Company
shall indemnify and hold the Administrator harmless against any and all
liability, loss, costs, damages, attorneys' fees and other expenses the
Administrator may sustain or incur in connection with administration of the
Plan, except for liability, loss, costs, damages, attorneys' fees and other
expenses caused by the negligence of the Administrator or his or her agent;
provided, that within 60 days after the institution of any action, suit or
proceeding the Administrator shall in writing offer the Company the opportunity
to handle, prosecute or defend the same, at the Company's own expense. The
Administrator shall have the right, but not the obligation, to adjust, settle,
or compromise any claim, obligation, debt, demand, suit or judgment against the
Administrator, and if such settlement is approved by independent legal counsel
selected by the Company then the Company shall reimburse the Administrator for
all sums of money the Administrator may pay or become liable to pay against
which the Administrator is indemnified hereunder.
17. Amendment or Termination of the Plan. This Plan shall terminate on
March 31, 2010. However, the Board of Directors may at any time, with respect to
any shares of Stock not then subject to Options, suspend or terminate the Plan,
and may amend the Plan from time to time as the Board of Directors may deem
advisable; provided, however, that except as provided in Section 14 hereof, the
Board of Directors shall not amend the Plan in the following respects without
the affirmative vote of approval by a majority of the outstanding shares of
Stock of the Company:
(a) To increase the maximum number of shares of Stock subject
to the Plan;
(b) To change the designation or class of employees eligible
to receive Options under the Plan;
(c) To materially increase the benefits accruing to Employees
under the Plan; or
(d) In any manner which would cause the Plan to no longer be
an employee stock purchase plan under Code Section 423.
18. Application of Funds. The proceeds received by the Company
from the sale of Stock pursuant to the exercise of Options shall be deposited in
the account of the general corporate funds of the Company.
<PAGE>
19. Approval of Stockholders. The Plan shall become effective on the
Effective Date subject to the affirmative vote by a majority of the outstanding
shares of Stock of the Company approving the Plan (which approval must occur
within twelve (12) months before or after the date the Plan is adopted by the
Board of Directors).
20. No Rights as an Employee. Nothing in the Plan shall be construed to
give any person the right to remain in the employ of the Company or any
Subsidiary Corporation or to affect the Company or any Subsidiary Corporation's
right to terminate the employment of any person at any time with or without
cause.
21. Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of the Plan.
I hereby certify that the foregoing Plan was adopted by the Board of
Directors of SoftNet Systems, Inc. on October 29, 1999.
/s/ Steven M. Harris
---------------------------
Steven M. Harris, Secretary
I hereby certify that the foregoing Plan was duly approved by
affirmative vote of a majority of the outstanding shares of Stock of the Company
on February 8, 2000.
/s/ Steven M. Harris
---------------------------
Steven M. Harris, Secretary